Behavioral Economics, as a Combination of Psychology and Economics

Abstract

This paper analyzes the literature on the interaction between psychology and economics. The relationship between these two disciplines has been once again on the agenda lately, as economists have started to use psychological literature in their work. Previously, with the neoclassical theory being the dominant view in the economics literature, economic models ignored psychological factors and treated human beings as purely rational decision makers. But this has begun to change. Behavioral economics has emerged as an interdisciplinary science and developed quickly in recent years. In this paper conceptual dimension of the collaboration of psychology and economics as well as the historical relationship between these two disciplines are examined. And then the methodology of behavioral economics is discussed.